U.K. manufacturing production (May 10, 9:30 am GMT)
BOE statement, MPC minutes, and Inflation Report (May 10, 12:00 am GMT)
Last Week’s Price Review
The pound is THE biggest loser of the week (as of 2 pm GMT), which marks the third straight week of net losses for the pound.
The pound started the week with a wobble, likely as a continuation of last week’s slide. However the pound quickly regained its footing, likely because of easing Brexit-related fears after the House of Lords voted to back an amendment that will give Parliament the power to block the government from leaving the E.U. without a deal.
Unfortunately for pound bulls, Tuesday rolled around and revealed that the U.K.’s manufacturing PMI dropped hard to a 17-month low of 53.9 in April (54.8 expected, 54.9 previous), which gutted the pound as expectations for a May BOE rate hike evaporated.
The pound later began to find buyers again ahead of the U.K.’s construction PMI report. Although easing Brexit-related fears may have also helped since there were rumors at the time that Theresa May is supposedly “confident” of reaching a deal for a custom union.
Going back to the U.K.’s construction PMI report, that came in better-than-expected (52.5 vs. 50.5 expected, 47.0 previous), so the pound extended its recovery.
However, the would-be rally quickly fizzled out and selling pressure returned when the U.S. session rolled around.
There were no apparent catalysts, but as noted in Wednesday’s U.S. session recap, there were rumors making the rounds at the time that the U.K. cabinet might reject the proposed customs agreement with the E.U.
At any rate, selling pressure on the pound became ever-present after that. And to make matters worse, the U.K.’s services PMI also failed to impress, which attracted additional sellers.
Interestingly enough, the pound was also the biggest loser in the wake of the NFP report. And market analysts were blaming that on the market players favoring the Greenback over the pound as BOE rate hike expectations crumbled.